Peer Insight recently led a scan of product management capabilities at leading firms. We spoke with product management pros at ten admired companies. The participating firms were Capital One, Humana, USAA, Optum, Vanguard, Gensler, PMI, Hard Yards Consulting, PBS, and Atlantic Media. In each case, we asked experienced product managers what the journey to embed this capability was like.
Our CEO, Natalie Foley, sat down with Founder Tim Ogilvie to reflect on the findings.
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Natalie Foley:
So, any surprises? Was this the product management you grew up with 20 years ago?
Tim Ogilvie:
We didn’t even have that term 20 years ago, maybe not even 10 years ago. In fact, 20 years ago, the “Big 4” was a reference to public accounting firms. Today it means Apple, Google, Facebook and Amazon. So that’s a sea change. Tech companies have blazed a new trail when it comes to how to create value, and product management is their bible for that.
Natalie:
I have to say, it sounds like progress if we’ve gone from how to account for new value to how to create new value.
Tim:
That’s a good point. The finance folks have stepped back, and the engineers have stepped forward. But I guess what surprised me about this research was how these large enterprises flipped their operating models on their heads using product management.
Natalie:
Flipped them in what way?
Tim:
Well, what I noticed was they went from asking, How do we get people to buy our amazing products? To asking, How can we build a product our customers will love? That seems pretty radical to me.
Natalie:
Yeah, that’s what having software-based products can do. Because they can change their products overnight.
Tim:
But you can’t change the culture overnight, so that’s the impressive part, to me. That their culture has adapted to this new capability.
Natalie:
This is role reversal. I’m the one who usually focuses on organizational dynamics.
Tim:
And what’s my usual role?
Natalie:
Well, I’d say, you go old school and equate everything to life in a startup.
Tim:
(laughs) OK, guilty as charged. So what was I supposed to say about product management?
Natalie:
Let’s see. You would typically remark on how much a product manager in these large firms functions like a startup founder or a small business owner.
Tim:
Oh, that’s definitely something I would say.
Natalie:
Like here’s this lone person, in a huge organization, with a lot of power often pretty early in their career. And I guess I went in thinking, sure, they drive the technical build, but to see their decision rights extending to all of the business outcomes, that was really exciting.
Tim:
Ah, “decision rights.” There’s the organizational change nerd I know and love.
Natalie:
To me, that was probably the key finding from the whole study. The few companies that didn’t give the product manager full decision rights for the business outcomes, they were the only ones who weren’t 100% sold on the benefits of product management.
Tim:
Yep, they were the exceptions that prove the rule.
Natalie:
In the majority of the companies, the PM owned metrics like customer acquisition cost, ARPU, engagement, retention …
Tim:
(interrupts) Yeah, basically everything involved in whether the product succeeds or not. They really talked like they were the GMs of that product.
Natalie:
Right. Basically, every new feature release is measured in those business terms. And where that happened, those were the companies who felt their product management capability was really humming.
Tim:
Does it make you want to be a product manager in your next life?
Natalie:
(smiles) We basically are. In fact, our venture leads get to be the first product manager for each of our client projects.
Tim:
I can see that. In fact, we’re product managers before we’ve figured out what the product is.
Natalie:
And then we have to get it to post-revenue and get traction. Which is why we have the best job in the world.
